I want to clarify from my previous rant: this is only marginally the FTC's fault.
These regulations have existed for a long time and they have been ignored by google and YouTube for years. The fine they received was due to them ignoring the regulations on what kinds of data they're allowed to collect from minors. They deserved that.
But at this point, they seem to think that's the end of their responsibility.
The reasons why this is such a big problem are 1) the FTC's guidelines are unnecessarily vague (though I'm guessing it's mostly an attempt by adults to thoroughly guess what sorts of things kids like), and 2) YouTube is flatly refusing to do anything to support their content creators.
The second point is the main reason, I think, why everything is falling apart. All of this could be easily fixed by, for example, age-gating main YouTube and requiring an account (or making it so, like on ao3, you need to agreed that you are of age to view such content) to view any of those videos. Or something. Anything more than the nothing YouTube is currently doing. (Hence: don't give them more credit than they're due.)
Basically: this is almost entirely on YouTube's shoulders. They designed a system that took advantage of and violated rules concerning content for minors, and now they don't want to do literally anything to help fix the problem except pay a fine (and what do they care? they've made billions on this data so far) and add a toggle they're not helping their users to decide whether or not to use.
Like, are these regulations on content for children necessary? Absolutely. Are they kind of horribly vague as they stand now? Also definitely. Are the threatened punishments likely too harsh to match the "crime" being committed by the majority of people who just aren't sure which side of the spectrum they fall on and aren't sure what to do? Yes. Could the regulations be improved at all, possibly made more specific and targeted? Oh, most definitely. But does that mean the current rules can or should be ignored? Not at all.
Did YouTube get off really fucking easy with a $170m fine considering how much they've made by flagrantly disregarding this law? Abso-fucking-lutely.
Does YouTube need to step their ass into gear to make their site into a place that adheres to those rules while also giving their content creators the freedom to, well, create?
You bet your ass they do.
By all means make YouTube a safer place for kids – it's been a kind of open, unacknowledged thing for a while that the internet at large isn't at all a safe place for kids to be given free reign anymore, and YouTube is no exception.
But for christ's sake, then build an infrastructure to support their safety instead of just doing...nothing. Nothing to support the people that have made your site successful and allowing them to be punished for your lack of both design and forethought.
So, in summary: the current pandemonium should not be blamed on the FTC—at least, most of it should not be. Roughly 90-95% of the fault can be laid at YouTube's feet, and it's mostly—if not entirely—due to corporate greed.